News Feature | December 20, 2013

Detroit's Water Plan To Raise Billions On Shaky Footing

Cash-strapped Detroit is trying to lease out its water utility as a much needed way to save money, but the effort may be in trouble.

The plan to regionalize the Detroit Water and Sewerage Department—the brain child of emergency manager Kevyn Orr—is seen as a path to monetization, according to Crain's Detroit Business. The move would save money for the city as Detroit restructures in bankruptcy court, reports said.

Detroit's emergency manager Orr estimated in his financial and operations report, presented to the state Department of Treasury in May, that DWSD regionalization could save $50 million to $70 million annually," Crain's said.

Under the plan, Detroit would "transfer the assets [of the water and sewer department] to a regional authority that would handle running the system and allow it to refinance an estimated $5.8 billion in debt," Macomb Dailyreported.

But at the moment, "county officials aren’t on board with a proposal," the report said. Reuters made the same observation this week: Talks appear to be stalled.

"A key sticking point is the estimate of what it would cost to repair or replace underground pipes and other Detroit Water and Sewerage Department infrastructure," the report said.

The Detroit Water and Sewerage Department (DWSD) is in dire need of money for repairs because the population in Detroit has dropped since the 1950s and so revenue from rate payers has not been available to maintain the pipes, Reuters reported.

For coverage of the sewage crisis in Detroit, check out previous reporting from Water Online.